Legal issues regarding the cost-covering compensation (KEV) for electricity through renewable energy sources

As of May 2008 the Swiss legislator introduced the StromVG (power supply legislation) which provides a model promoting renewable energy. This model states that producers of electricity through renewable energy sources will receive compensation to cover their manufacturing costs over a period of 2'225 years. These payments will be made independent of current market prices. The so-called cost-covering compensation (KEV) will be covered by a surcharge on transmission costs of high voltage networks. This promotion aims at an increase of the annual electricity production through renewable energies of 5400 GWh. The surcharge on the transmission costs qualifies as public taxes. According to the prevailing doctrine the state needs an explicit constitutional basis to introduce new taxes which in this case is missing. Therefore, according to the applicable legislation the KEV would have to be financed by the general state budget. The plant operators’ applications for the KEV are taken into account firstly, depending on when they were handed in and secondly, according to the capacity of the power plant. In several respects this order of priority is unsatisfactory. Moreover, the prevailing order of priority disregards other important public interests. Consequently, this order conflicts with the right to equality because in our opinion the awarding process favors large-scale plants and disregards other important parameters of a power plant such as its technical and economic efficiency.